OPEC expects demand for its crude to fall to the lowest in three decades as the coronavirus outbreak freezes the global economy
Oil was stuck near $20 a barrel and set for a second weekly loss after a wave of gloomy demand forecasts outweighed optimism that a deal from the world’s biggest producers would alleviate virus-led demand losses.
OPEC expects demand for its crude to fall to the lowest in three decades as the coronavirus outbreak freezes the global economy, the group said Thursday. That followed a prediction from the International Energy Agency that 2020 could be the worst year in the history of the oil market. Futures slumped to an 18-year low this week, even after a historic agreement to curb supply.
In a joint statement Thursday, Saudi Arabia and Russia said they will “continue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary.”
Stockpiles across the world continue to expand as consumption of everything from gasoline to jet fuel crashes due to lockdowns to stem the outbreak. The Trump administration is considering paying American companies to leave crude in the ground, while ConocoPhillips is the latest energy major to announce deep cuts to its operations, slashing more than a quarter of its North American production and halting all U.S. fracking.
“The latest market response suggests that the output cuts are having limited effect other than to perhaps stall an inevitable moment of reckoning when stocks exceed capacity and tanks overflow,” said John Driscoll, chief strategist for JTD Energy Services Pte in Singapore. “The cuts are not enough.”
West Texas Intermediate for May delivery dropped 40 cents, or 2%, to $19.47 a barrel on the New York Mercantile Exchange as of 7:35 a.m. London time. The contract, which expires Tuesday, closed unchanged on Thursday at the lowest level since 2002 and is down almost 15% this week. The more-active June future advanced 3.1% to $26.31.
Brent for June delivery rose 2.3% to $28.45 on the ICE Futures Europe exchange after climbing 0.5% on Thursday. The contract is down 9.7% this week.